“There’s more clarity gained not around the way the markets are, but the way people trade.” - Nigol Koulajian (Tweet)
Katy Kaminski and I continue our conversation with Nigol Koulajian, and discuss if his strategies of working with, around, and doing the opposite of what many investors are doing, has given him any advantages? In this episode, we talk about the risk of research and data affecting the market, why he distrusts in many institutional teachings of finance, and what he is looking forward to this year.
Thanks for listening and please welcome our guest Nigol Koulajian.
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In This Episode, You'll Learn:
How savvy investors stay ahead of the curve
“The upside of a bubble is it’s easy to convince people to come in.” - Nigol Koulajian (Tweet)
Why you need to isolate yourself from the hivemind of mainstream investors
Why those using smart beta have not succeeded recently
Nigol’s opinion on VIX’s impact in and outside the managed futures industry
“Investing is a very complex process where your perception of the market affects future returns.” - Nigol Koulajian (Tweet)
How Nigol adapts to the changing industry
Why Nigol calls filtering the “holy grail” and how he uses it
The state of institutional and scientific learning of investing
“The reality is markets lead the economy, not the other way around.” - Nigol Koulajian (Tweet)
How research into the markets affects their behavior
What opportunities 2018 brings for Nigol and other investors
Why Nigol believes CTA’s are still very useful for managed futures
Connect with Quest Partners LLC:
Visit the Website: http://www.questpartnersllc.com/
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E-Mail Quest Partners LLC: [email protected]
Follow Nigol Koulajian on LinkedIn
“You cannot have a purely rational mind when you’re trading. You need to realize the cycle of emotions that investors are going through.” - Nigol Koulajian (Tweet)
Full Transcript
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Nigol
…against it, which is what all those mean reversion models that you see today are.
Niels
So I think I agree with you, meaning that I’m just making sure that I fully understand. But, it’s true, and I think it’s true as well in the trend following space that those firms who really find something unique to do, they could be called a trend follower if they do something unique. We see that there are a few of them that have delivered good returns as I noticed with the BTop 50 index, which is the twenty biggest firms in the industry.
Since 1990 there have been seven negative years. Six of them have come since 2009. So, yeah, you’re right. The majority don’t seem to be adapting well, but there are people who truly find unique ways of dealing with this. In a sense, I feel that investors are, unfortunately, going for the classical cheap solution, not knowing that they are leaving all the returns for others just because they charge a little bit more. That’s really unfortunate for the end investor.
Nigol
Sure, retail always looses. I don’t think CTAs are going to break that rule. So, the more convincing (in a certain period) that an investment is, the more likely that you’re going to lose money. This is why sophisticated investors, at a certain level, are able to stay ahead of the market and allocate when a strategy is losing as opposed to trying to chase returns. Chasing returns, which feels amazing (and you can have anybody do it), typically is counterproductive.
So, a lot of our brain is designed to chase returns like on a strategy level,